Valeant Shake-Up: CEO Out, CFO Denies Accusations Of ‘Improper Conduct’
The company also announced hedge-fund manager William Ackman will be added to its board. Valeant has been plagued with troubles since last August, enduring stock-price stumbles, questions about its accounting practices, attacks on its strategy of raising drug prices, a lengthy medical leave by CEO Michael Pearson and the internal review that delayed the filing of its annual report.
The Wall Street Journal:
Valeant Starts CEO Search, Alleges Improper Financial Conduct
Valeant Pharmaceuticals International Inc. moved to replace its longtime chief executive, part of a series of steps to regain credibility and show investors it is committed to a fresh start after months of failed attempts. Valeant’s decision to look for a successor to CEO Michael Pearson comes just three weeks after it decided to take him back following an extended medical leave to treat severe pneumonia that he began around Christmas, a stretch during which the drugmaker’s woes mounted. (McNish, Hoffman and Benoit, 3/22)
The Wall Street Journal:
Valeant: Pearson Is Out, Ackman Is In, Controversy Continues
The drama at Valeant just won’t stop. Embattled pharmaceutical giant Valeant Pharmaceuticals International said Monday morning that it was replacing is chief executive, J. Michael Pearson, and adding hedge-fund manager William Ackman to its board. But that move created even more controversy for the company, as the directors failed in an attempt to make room for Mr. Ackman by pushing its former chief financial officer, Howard Schiller, off the board. (Holm, 3/21)
The Wall Street Journal:
Schiller Responds To Valeant Claim Of ‘Improper Conduct’
A former Valeant executive–and current board member–isn’t going away quietly. Among a long list of big announcements Monday, embattled pharmaceutical giant Valeant Pharmaceuticals International said that an internal committee had found that former Chief Financial Officer Howard Schiller had engaged in “improper conduct” that had contributed to the company’s need to restate its results. In a statement released through his lawyers, Mr. Schiller is refuting that claim, saying “at no time did I engage in any improper conduct that relates to any restatement of revenue the Company is considering.” (Holm, 3/21)
Bloomberg:
Schiller May Be Forced To Pay Back Valeant Up To $26.1M
Howard Schiller, the embattled Valeant Pharmaceuticals International Inc. director, may be forced to pay back some of the $26.1 million in incentive compensation he received as chief financial officer in 2014. Schiller, who was CFO until July 2015, was awarded restricted stock worth $23.7 million and a cash bonus of $2.4 million in 2014, according to Valeant’s most recent proxy statement. Under the company’s clawback policy, Valeant can reclaim that money. (Melby and Ritcey, 3/21)
Reuters:
Valeant's Harsh Words On Ex-Executives May Play Into Government Probes
A move by Valeant Pharmaceuticals International Inc to single out two former top executives over its accounting problems is likely a bid to win leniency with government agencies investigating the drugmaker, according to accounting and securities experts. Valeant on Monday said Chief Executive Michael Pearson was leaving the company, and billionaire investor William Ackman, one of the company's biggest shareholders, would take a seat on its board, as Valeant tries to rectify accounting problems and save its business. Valeant is under investigation by both state and federal agencies, including the Securities and Exchange Commission. (Rosenberg and Lynch, 3/21)
The Wall Street Journal:
One Person Still In The Green On His Valeant Bet: Michael Pearson
When Valeant Pharmaceuticals International named Michael Pearson as its new chief executive back on Feb. 1, 2008, the company noted in its announcement that he would be “personally purchasing a minimum of $3 million in company stock.” It’s unclear when or how much stock Mr. Pearson bought at the time and whether he held onto it. But based on that day’s closing price, $3 million worth of shares bought then would be worth about $6 million today, when the company said it was looking for a successor to replace Mr. Pearson as CEO. (Becker, 3/21)
The Wall Street Journal:
Sequoia Fund Sold 1.5 Million Shares Of Valeant Pharmaceuticals
Valeant Pharmaceuticals International Inc.’s largest stakeholder said a fund it manages sold about 1.5 million shares of the drug maker’s stock last week, when the company’s share price fell more than 60%. Ruane, Cunniff & Goldfarb Inc.’s Sequoia Fund Inc. sold the Valeant shares to reduce investors’ taxes by booking capital losses, said David Poppe, executive vice president at Ruane, Cunniff. The fund’s shares in question were purchased in October, Mr. Poppe said. (Krouse, 3/21)
The Wall Street Journal:
ValueAct’s Not-So-Invisible Role In Valeant’s Business And Pay Model
For much of the past decade, ValueAct Capital Management LP‘s discussion of its investment in Valeant Pharmaceuticals International went beyond touting its returns. The hedge fund often lauded the pharmaceutical company’s business model and executive-compensation structure, of which it was a key architect. No longer. (Farrell, 3/21)
News outlets look at what all this means for the future of the company —
The Wall Street Journal:
A Valeant Breakup: Is It Inevitable Now?
The book has closed on the roll-up story at Valeant Pharmaceuticals International. Bond and equity holders now need to ask whether a breakup should follow. Valeant said Monday Chief Executive Michael Pearson would leave, once a successor is identified. The activist investor William Ackman, who owns 9% of the company, is joining the company’s board. As far as it goes, this news is an incremental positive for shareholders. They will now have more aggressive board representation during a period of potential conflict between Valeant’s debt and equity holders. (Holm, 3/21)
The New York Times:
A Shake-Up At Valeant Signals The End Of An Era
As recently as last summer, J. Michael Pearson styled himself as a brash and bold executive with a new way of thriving in pharmaceuticals: buying other companies, slashing costs and sharply raising prices on undervalued drugs. The strategy had worked for years, as Valeant Pharmaceuticals, the company he ran, became an investor favorite. But by the end of 2015, Mr. Pearson and his company’s strategy were emblematic, on Capitol Hill and elsewhere, of high drug prices and the pharmaceutical industry’s worst impulses. (Thomas and Pollack, 3/21)
Marketplace:
Valeant's Story: A Cautionary Tale
The controversial company Valeant Pharmaceuticals is in the middle of what one analyst called a soap opera. On Monday, the company announced that its current CEO is stepping down, a big-name investor is joining the board of directors and its financial future is in question. While this all may be rough news for investors, it could be good news for all of us who buy prescription drugs. (Gorenstein, 3/21)
